In the field of inventory management, a SKU is usually a distinct item, whether a product or service, as it is offered for sale that embodies attributes associated with the item and that distinguish it from all other items. That is, a SKU is the smallest unit that can be offered for sale or counted as inventory, and a SKU of an item can be considered as a unique identifier of that item. For a product, the attributes of the SKU may include the product's manufacturer, product description, material, size, color, packaging, warranty, etc.
In cost-based inventory allocation, it is often important to determine the relative value of a SKU from the perspective of cost savings in terms of shipping. In particular, when SKUs are allocated sequentially, the ranking of SKUs is crucial for optimization of inventory allocation.